#LordstownMotors

Ohio-based Lordstown Motors has received approval from the U.S. Bankruptcy Court to sell its remaining manufacturing assets to a company owned by its founder and former CEO Stephen Burns for roughly $10 million.

LAS Capital, owned by Stephen Burns, will reportedly receive Lordstown's intellectual property, business data, and any machinery used for manufacturing. However, Taiwan’s Foxconn will retain the factory itself after a financial dispute which ultimately left Lordstown filing for bankruptcy last June. 

On Tuesday, Lordstown Motors Corp. (LMC) officially filed for bankruptcy and sued Foxconn. Though the writing was already on the wall for the Ohio-based electric vehicle manufacturer. Lordstown’s share price collapsed in 2021 and the company has suffered numerous production delays. This seems to have encouraged the Hon Hai Technology Group/Foxconn to back out of its strategic partnership.

But it’s not bad news for everybody. Former chief executive of Lordstown Motors, Steve Burns, managed to sell off every share of his stock before the company filed for Chapter 11. You might remember him as the executive who abruptly quit the company without explanation shortly after LMC's stock valuation slammed into the pavement.

The Ohio-based Lordstown Motors has reportedly resumed assembly and delivery of its all-electric Endurance pickup this month, after having to pause production in February to address quality concerns.

Lordstown has had more than a bumpy road since Vice President Mike Pence took the stage at its coming out party in 2020. The company scaled back its grand plans for fleet EV domination, and as of early January, it had built just 31 trucks and sold six due to delays caused by supply chain shortages. Now, the company is recalling 19 of its Endurance pickup trucks for a potential electrical issue that could cause a loss of propulsion.

If you’ve been following Lordstown Motors, you’ll undoubtedly know that the promising automotive startup has had a lot of trouble getting its electrified truck to market. With bankruptcy looming, the would-be automaker sold the all-important factory it had purchased from General Motors (at a discount no less) to Foxconn and created a new joint venture with the Taiwanese business. But it’s looking like more support will be needed before any vehicles manifest, so Foxconn is upping its investment by $170 million.

Best known for manufacturing small electronic devices for companies around the world, Foxconn will soon be branching out to assemble automobiles in Ohio. On Wednesday, the Taiwanese Hon Hai Precision Industry Co. (traded as Foxconn) closed on a deal with Lordstown Motors to purchase a 6.2 million-square-foot plant that used to belong to General Motors.

The $230 million deal leaves Foxconn with the facility and 400 Lordstown manufacturing employees it’s supposed to use to assemble the delayed Endurance pickup. Though the long-term plan is to use the plant to become a contract manufacturer akin to Magna Steyr, with an emphasis on all-electric vehicles.

Lordstown Motors has gone from the savior of Ohio to just another blowhard electric vehicle startup. Last year, it became the focus of investment research firm Hindenburg Research and an incredibly damning report that accused the company of fraudulent behavior. The paper cited thousands of non-binding, no-deposit orders and was proven right a few months later when the startup announced it didn’t actually have enough money to commence commercial production. By June, Lordstown was under investigation and losing top-ranking executive with nothing to show for itself other than a factory it purchased from General Motors at a discount where it installed a pointless solar panel array. The company said it would be selling the plant to Foxconn Technology Group (Hon Hai Technology Group) in October, along with $50 million in stock, with the plan being to make the Taiwanese firm a contract assembler for the Lordstown Endurance pickup.

It’s going to need that money too because GM is severing ties with the startup and has confirmed it offloaded its remaining stock over the holidays. While the Detroit-based automaker only held about $7.5 million worth of shares, it still represented about 5 percent of Lordstown and continued support of a business that looked to be foundering.

The troubled Lordstown Motors has announced it will be selling its Ohio production facility to the Taiwanese Hon Hai Precision Industry, better known as Foxconn. But this is not a case of the prospective automaker offloading its assets so it can pay off its debts in full retreat. Instead, Lordstown has asserted this is a necessary partnership that will help guarantee it can still deliver the all-electric Endurance pickup truck.

Terms stipulate that Lordstown Motors will sell the sprawling factory to Foxconn for about $230 million. Two years ago, the site was purchased from General Motors for a very breezy $20 million after the Detroit-based manufacturer decided to abandon the Chevrolet Cruze. Foxconn will also be buying up $50 million worth of common stock and effectively take responsibility for production at Lordstown Assembly. However there is a laundry list of things that need to be done before pickup assembly is even an option.

Lordstown Motors has entered into the phase where an EV startup has to tread water now that everyone knows it failed to disclose various production hurdles and shared inaccurate information about the pre-orders it has been bragging about. The only thing offsetting this bad situation is that our misgivings regarding Lordstown could probably be a little worse. Nikola and Faraday Future told some real whoppers, while the Ohio-based company appeared to have at least one toe dipped in the waters of truth. But we can’t exactly call lying a little less than the competition a major triumph.

It remains a bad situation, particularly because Lordstown lost CEO Steve Burns almost immediately after stating the company was “highly dependent” on his leadership in June. However, the firm said it had remedied the situation by appointing Daniel Ninivaggi as the new chief executive on Friday.

We’ve got more bad news about Lordstown Motors. Following several volleys of bad mojo ending with the departure of its upper management, the EV startup has informed the Securities and Exchange Commission (SEC) on Thursday that it doesn’t have any binding purchase orders or commitments.

That’s not what the company was saying several months ago. Hell, that wasn’t even what it said earlier this week when President Rich Schmidt told the Automotive Press Association the company had enough orders to support two years of production. Since the ability to sell automobiles is a somewhat relevant factor in an automaker’s long-term success, we’re getting concerned that Lordstown isn’t long for this world.

Starting a car brand has to be among the more foolhardy endeavors one can embark upon. The industry is saturated with giant, multinational companies that don’t want competition and a regulatory environment that requires a ludicrous amount of wealth and plenty of time to overcome. Despite this, we’ve seen countless electric vehicle startups attempting to accrete into something profitable over the last few years. But even the winners have found themselves wholly dependent upon government-backed. carbon-credit schemes or blank-check firms designed to guarantee their IPOs are astronomically high — often before they’ve shown a functional prototype.

This makes distinguishing a company with potential from those that are dead on arrival incredibly difficult. Though it’s getting easier to see which side of the fence Lordstown Motors will be occupying after a particularly grim string of months. One of its prototypes spontaneously combusted during testing last March, at roughly the same time Hindenburg Research was accusing it of fraud. More recently, the business lost CEO Steve Burns and confessed that it was in desperate need of money to start production.

One of the biggest contributors to EV skepticism are the companies associated with furnishing the technology. While brands like Tesla have unquestionably proven that there’s a market for electric cars, there’s a cadre of startups that seem built on a foundation of falsehoods and do nothing other than vacuum money to feed hypothetical products that never seem to manifest in the physical realm. But the problem is that it’s incredibly difficult to distinguish between them when even Tesla participates in making wild promises it clearly has no intention of keeping and is heavily dependent on regulatory issues favoring EVs — specifically via the sale of carbon credits.

Lordstown Motors has occupied a gray area between the extremes. However, it recently cut this year’s production targets by more than half, warranting some legitimate concern.

Hindenburg Research, the firm that outed Nikola for overselling its technology in last year’s scathing report, has selected a new target. The company in its crosshairs this time around is Lordstown Motors. While the investment research firm stopped short of saying the Ohio-based manufacturer committed fraud, it came extremely close. On Friday, Hindenburg alleged that Lordstown is stringing investors along, will be unable to adhere to its existing production targets, and fabricated sales to make the business appear more appetizing.

“Lordstown is an electric vehicle [special purpose acquisition company] with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities,” reads the report. “The company has consistently pointed to its book of 100,000 pre-orders as proof of deep demand for its proposed EV truck. Our conversations with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy.”

Lordstown Motors announced on Monday that they had exceeded 100,000 pre-orders for their Endurance light-duty, all-electric pickup, slated to begin production in September.

The question of how fledgling EV maker Lordstown Motors plans to fund production of the Endurance pickup has been answered. On Monday, the owner of GM’s former Lordstown Assembly plant announced a merger with a blank-check company, with a cash-raising NASDAQ listing as its goal.

Lordstown Motors plans to finalize the merger with DiamondPeak Holdings Corp., which is already listed on the NASDAQ, by the fourth quarter of this year — after which the combined entity will carry the symbol “RIDE.”